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Thu 14 Aug 2008 07:47 AM

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Kuwait minister denies oil refinery violations

Oil Minister hits back over claims regarding deals done for $15bn Al-Zour refinery.

Kuwait's oil minister has rejected charges by some politicians about legal violations in contracts awarded for a $15 billion oil refinery project and said the courts had ruled that they were baseless.

"The judiciary had concluded ... that the suspicion of infringing on public funds in issues relevant to the refinery were unfounded," Mohammad al-Olaim said in a statement carried by the official news agency KUNA.

Olaim said a citizen he did not identify had brought the issue before the courts about six months ago.

A parliamentary committee has been probing some contracts awarded for the building of the 615,000 barrels per day Al-Zour refinery on the grounds that lower bids were ignored.

Last month, the committee signalled its support for the government to go ahead with the project after Olaim cooperated in the probe.

Olaim's remarks came after a group of politicians warned the government not to sign the contracts, saying the tender process had violated the law.

Parliamentarians from the Popular Action bloc have said that, among other issues, the government should not have awarded U.S. firm and project manager Fluor Corp a separate contract for utility and offsite services without a tender. The four-strong group from the Popular Action bloc has called on Olaim not to sign any final contracts, or face questioning in parliament.

The country's auditing bureau, an independent watchdog, looked into the process and did not report any wrongdoings, "which affirms that the procedures were legal", Olaim said.

The deals include a package worth $4 billion to build crude distillation units for Japan's JGC Corp and South Korea's GS Engineering and Construction Corp.

A $2 billion contract was awarded to South Korea's SK Energy to build a hydrogen production unit, while Daelim Industrial, also from South Korea, won a $1.2 billion contract to set up storage tanks.

Parliament has a history of challenging the government and a questioning such as that considered by the bloc has often led in the past to a no confidence vote and the resignation of the minister in question.

The previous parliament focused on questioning ministers, prompting several resignations and delaying key economic legislation until a new election was called on May 17. (Reuters)

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